India’s federal government has announced a record increase in infrastructure spending, raising the capital expenditure allocation to ₹12.2 trillion ($133.1 billion) for the fiscal year 2026–27, Finance Minister Nirmala Sitharaman said in the Union Budget presented on February 1, 2026. This marks an 11.4% annual rise over previous allocations as the government continues to prioritise infrastructure as a key engine of economic growth.
In the Union Budget 2026–27 presented on February 1, 2026, Finance Minister Nirmala Sitharaman announced a major change to investment rules for individuals living abroad, aimed at encouraging greater participation in Indian financial markets.
Under the updated regulations, persons resident outside India (PROIs) — including Non-Resident Indians (NRIs) and people of Indian origin — will now be allowed to invest up to 10% of a listed company’s equity through the Portfolio Investment Scheme (PIS), up from the earlier 5% cap.
India’s federal government has decided to maintain the share of tax revenue distributed to state governments at 41% for the five-year period from 2026 to 2031, Finance Minister Nirmala Sitharaman announced in the 2026–27 Union Budget presentation in Parliament on February 1, 2026.
On 1 February 2026, Finance Minister Mrs Nirmala Sitharaman presented the Union Budget 2026-27 in Parliament, outlining the government’s roadmap for economic growth, reforms, infrastructure, social welfare, and ease of doing business for the coming year. The Budget focused on boosting manufacturing, strengthening infrastructure, enhancing education and health systems, supporting entrepreneurship, and empowering youth, women and rural India.
As per market veterans, recency bias peaks at market tops. The frenzy seen in smallcaps, SMEs, IPOs, defence, railways, solar, chemicals, data centres and new-age tech has faded, with most themes peaking and sliding lower, leaving little room for exits. Currently, base metals, PSU banks and the bullion pack are the only active themes. As per market grapevine, excessive participation turns risky, and the ongoing rush into precious metals warrants caution and a stay-light approach.
Since the last Union Budget on February 1, 2025, around 16 equity mutual funds have delivered returns exceeding 20%, highlighting strong pockets of performance even as markets remained mixed. This analysis by ETMutualFunds covered 485 equity schemes, of which 405 showed positive returns and 80 delivered negative returns during this period.
Foreign institutional investors (FIIs) have pulled a staggering $23 billion out of Indian equities, with about $19 billion exiting in 2025 and another $4 billion in January 2026, raising alarm bells for Indian markets ahead of the Union Budget 2026. The sharp outflow is driven by a weaker rupee and lower post-tax returns, which make high-valued Indian stocks less attractive compared with safer opportunities in developed markets.
As India’s Union Budget 2026 approaches, investors are closely watching market themes that could shape stock performance. Analysts expect Finance Minister Nirmala Sitharaman to maintain fiscal prudence while accelerating public spending on key sectors such as infrastructure, defence, power and housing.
Coinciding with FM, Nirmala Sitharaman’s Union Budget 2026-27 on Sunday, 1st February 2026, will be our Budget coverage in MT 24×7 with reactions & recommendations of stocks & industry segments by our analysts.
Life Insurance Corporation delivered steady earnings growth with FY26 EPS projected at Rs.85, while trading at a reasonable forward P/E of 10.6x.
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